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Audited annual results, notice of AGM and Renewal of cautionary announcement
IFA HOTELS & RESORTS LIMITED
("IFA SA Group")
Registration number 1919/001318/06
Share code: IFH ISIN: ZAE000075669
CONDENSED CONSOLIDATED RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2012
WITH NOTICE OF ANNUAL GENERAL MEETING AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
These are the summarised consolidated results of the audited financial statements, which were prepared
under the supervision of the financial director, CJ Schutte (CA)SA.
The audited financial statements are available on CD or in a printed form from the registered office
of the company and may be requested by:
Mail: PO Box 12, Zimbali, 4422
Telephone: +27 32 538 1205
Email: cornel@ifahotelsresorts.com
IFA HOTELS & RESORTS LIMITED
("IFA SA Group")
Registration number 1919/001318/06
Share code: IFH ISIN: ZAE000075669
CORPORATE INFORMATION
Directors
TJM Al-Bahar (Chairman)*
WJ Burger (Chief Executive Officer)
PGR de Sylva, GE Larson*
KM El-Marsafy*, VM Nkosi*
EAA Al-Essa* CJ Schutte
WP Witthuhn (resigned 31 January 2012)
*Non-executive
Registered office
Zimbali Northgate Suites, Zimbali Coastal Resort, KwaZulu-Natal
Company Secretary
CJ Schutte CA(SA)
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg
Sponsor
Sasfin Bank Limited
CHIEF EXECUTIVE OFFICER'S REPORT
We entered 2012 with the World Bank and the IMF lowering their global growth forecasts; Business Unity SA cautioned
that "the global economy had entered a dangerous new phase" and the SA Reserve Bank revised SA's growth down from
3% to 2,8%.
As we prepare this report it is known that the SA economy performed worse than expected providing growth of only 2,5%
for the year. The glimmer of hope came from emerging economies and growth in the sub-Saharan region was expected
to be lively.
Nevertheless in a curious twist South Africa's slow economy and resultant pull back in building activity that has limited new
hospitality development has impacted positively on our business.
Demand for conference facilities at the Zimbali Lodge and Zimbali Resort has been brisk throughout the year, while the
weakening rand has seen holiday makers swop overseas for local holidays and opt for upmarket vacation resorts such as
Zimbali.
Having aligned the group's financial year end with that of its majority shareholder IFA Kuwait in 2011, this report covers the
12 month trading period from January to December 2012.
The overall results for the period show an improvement on 2011 when significant impairments were made to the value of
loans to associates.
OPERATIONS
IFA Hotels & Resorts SA
IFA Hotels & Resorts SA is a joint venture partner with Tongaat Hulett Development whose main project has been the
development of the Western and Southern sections of the Zimbali Coastal Resort which is now largely complete. Further
projects adjacent to the resort include Zimbali Lakes and Westbrook, the latter providing a "landbank" for development
over the next 20 to 30 years.
New land sales in the resort were subdued during the year solely because the Zimbali Coastal Resort development is
nearing sell out and land stock is limited.
Detailed consideration has been given to the development plans for the Zimbali Lakes project and the partners have
concluded that the original plan, with relatively minor amendments, remains the best course of action. This will result in
increased activity and the re-launch for sales purposes in the coming year.
The renewed energy for the Zimbali Lakes project has been reinforced by the continued demand for property within the
Zimbali Coastal Resort.
Zimbali Estates
Zimbali Estates is the registered estate agent with a sole land sales mandate from the TIFAZ joint venture. The company
also focuses on the resale property market within the Zimbali Coastal Resort.
Commissions from new land sales in the resort were limited in line with the sales performance reported on above. The re-
launch of Zimbali Lakes will provide significant inventory for the coming year.
Commissions from resale activity have increased by 45% with the company having brokered sales within Zimbali Coastal
Resort of R253 million for the period under review as compared to R164 million for the preceding 12 months.
IFA Zimbali Lodge
Built some 15 years ago it is a well established hotel in the eastern part of Zimbali Coastal Resort.
The Zimbali Lodge has continued to maintain its occupancy levels with revenue being enhanced from sales of the Zimbali
Vacation Club offering which was launched in the second quarter of 2011.
The entity continued to report a small loss during 2012. However, the vacation club sales process is starting to mature with
a resultant increase in sales pace.
IFA Estates
IFA Estates is the registered estate agent with a sole mandate from the Zimbali Lodge and the group's sister companies to
market a range of leisure property products.
The leisure property portfolio consists of Zimbali Vacation Club; Fairmont Heritage Place ("FHP") Private Residence Club
(fractional ownership model) and Fairmont Zimbali Resort hotel condominiums, the latter being a sectional title rental pool
investment.
The agency enjoyed a marked improvement in the sale of Zimbali Vacation Club with 90 weeks having been sold compared
to the 59 weeks in 2011.
However, the performance of FHP and hotel condominium products fell well short of expectations in 2012 and compared
to the prior year. This was partially due to the demand for and focus shifting to the vacation club offering which resulted
in an overall decline in revenue for the business unit. Staffing issues have had an impact and these are being managed. A
reduction in borrowing costs has assisted in the reporting of a small profit for the period under review.
Zimbali Rentals
A registered estate agency focusing on holiday letting within the Zimbali Coastal Resort. Performance of the operation
was below expectation and consideration is being given to plans to improve our market share of the rising rental demand.
IFA Boschendal Investments
Although the investment in the prestigious Boschendal Estate, with its planned development of a mixed use resort, fitted
well with the group's portfolio and despite having grown our interest from 19,25% in 2006 to 37,33% in 2010, an opportunity
regarded "as the right deal for the right time" presented itself and the investment in and loans to Boschendal were
disposed of for R80 million in cash on 24 August 2012.
Ongoing delays in securing development rights combined with the need to fund the operating costs and debt of the
Boschendal Estate placed the group under ongoing financial pressure.
As reported in the prior period, a provision of R81 million was made against the investment in and loan to Boschendal;
further impairment provisions of R6 million and a loss on disposal of R1 million are now reported as a result of the sale.
The disposal proceeds have been used to retire debt of R54 million and the balance to fund ongoing operations. In
addition to the aforementioned retirement of debt the disposal has also relieved the group of its obligations towards the
R171 million debt in Boschendal.
IFA Legends Investments
IFA Legends Investments holds 20% with IFA H&R Kuwait holding a further 30% in the company controlling this world class
mixed use resort.
Situated on a 22 000 hectare estate in the Waterberg region of the Limpopo Province, the development boasts two distinct
experiences:
- the Big-5 Entabeni Private Game Reserve with five boutique lodges offers an exclusive safari experience in a malaria
free area; and
- the adjacent Legend Golf and Safari Resort ("LGSR") WITH A 200-room hotel complex featuring an 18-hole signature
golf course and the renowned extreme 19th hole which is accessed by helicopter. Opened in 2012, the Queen
of Sheba Conference Centre comfortably seats up to 500 delegates and offers a new and exciting venue to the
conference market. LGSR also offers real estate opportunities from free-hold ownership with rights to participate in
the hotel's rental pool to the soon to be launched vacation club.
Looking at the performance of this entity, lodging operations continued to stabilise during the past 12 months, however,
real estate sales have not materialised, due to market conditions.
We have fully written down our R15 million investment that comprises our 20% interest in the entity through equity
accounted losses. The current year has required only moderate impairments of R7 million to our loan account.
IFA Hotel and Resorts Limited
IFA Hotel and Resorts Limited is the SA listed entity and holding company. Impairments of loans to subsidiaries and
associates during the year impacted on its figures. However, having made significant provisions for impairments in the
prior reporting period the current year has seen limited further impairments relating to the loans to IFA Boschendal and
IFA Legends.
Provisions of R13 million or the impairment of loans to the IFA Boschendal and IFA Legends operations were made in the
2012 year.
These reverse on consolidation as the associated losses and impairment provisions are also recognised in the subsidiary
companies.
Prospects
The last quarter of 2012 has seen a subtle change to the market providing a sense of optimism for 2013 and beyond. There
is a sense that we have turned the corner although the road ahead is steep with many challenges.
A major advantage for Zimbali is that it has significant volumes of accommodation in both its hotels as well as leveraging
off rental homes on the estate.
An excellent December provided a high note at the close of the financial year. The Zimbali Lodge and Resort was virtually
fully booked throughout the month which in turn stimulated vacation club sales.
Appreciation
The support given to IFA Hotels & Resorts by our parent company in Kuwait has been essential to our ability to withstand
the challenges of the past few years. We are also conscious of the support received from our bankers.
I thank our shareholders, customers and suppliers for their continued invaluable support. I also thank our staff, management
and fellow directors for their hard work and dedication during the period.
Sincerely,
Werner Burger
Chief Executive Officer
25 March 2013
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
31 December 31 December
2012 2011
R'000 R'000
ASSETS
Non-current assets 371 032 464 453
Property plant and equipment 109 226 111 984
Goodwill 2 297 2 298
Loans to associates 245 557 324 403
Financial assets 2 000 2 400
Deferred tax 11 952 23 368
Current assets 207 490 227 188
Inventories 987 1 138
Township properties 152 193 157 672
Trade and other receivables 13 328 27 421
Cash and cash equivalents 30 002 22 799
Financial assets 10 980 18 158
Total assets 578 522 691 641
EQUITY AND LIABILITIES
Capital and reserves (104 421) (56 893)
Issued share capital and share premium 71 892 71 892
Revaluation reserve 44 303 45 878
Accumulated loss (220 616) (174 663)
Non-current liabilities 628 075 724 362
Loans from group companies 38 016 37 069
Loans from shareholders 419 542 408 016
Finance lease obligation 202
Borrowings 161 397 268 335
Deferred tax 9 120 10 740
Current liabilities 54 868 24 172
Trade and other payables 27 168 22 072
Finance lease obligation 199 175
Bank overdraft 1 746
Borrowings 27 231
Current tax payable 270 179
Total equity and liabilities 578 522 691 641
Net asset value ("NAV") per share (cents) (47,85) (26,07)
Net tangible asset value ("NTAV") per share (cents) (48,91) (27,13)
Number of shares in issue and used for NAV and NTAV calculation 218 210 680 218 210 680
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
12 months ended 18 months ended
31 December 31 December
2012 2011
R'000 R'000
Continuing operations
Revenue 54 225 98 205
Operating profit/(loss) (27 294) (122 051)
Investment revenue 9 862 12 407
Loss from equity accounted investments (18 919)
Loss on disposal non-current assets (1 250)
Finance costs (18 934) (33 289)
Profit/(loss) before taxation (37 616) (161 852)
Taxation (8 336) 9 888
Profit/(loss) for the period from continuing operations (45 952) (151 964)
Discontinued operation
Profit/(loss) from discontinued operation 15 685
Profit/(loss) for the period (45 952) (136 279)
Other comprehensive income
Income tax relating to components of other comprehensive income (1 575) 283
Other comprehensive income for the period, net of tax (1 575) 283
Total comprehensive income for the period (47 527) (135 996)
Loss for the period (45 952) (136 279)
Attributable to:
Equity holders of the parent (45 952) (136 279)
Basic and diluted (loss)/earnings per share ("EPS") (cents) (21,78) (62,32)
Notes to the income statement
Basic and diluted headline loss per share ("HEPS") (note 1) (cents) (21,78) (64,61)
SEGMENTAL ANALYSIS
The IFA SA Group adopted IFRS 8: Operating Segments with effect from 1 July 2009. IFRS 8 requires operating segments
to be identified on the basis of internal reporting about components of the group that are regularly reviewed by the chief
operating decision maker ("CODM") to allocate resources to the segments and to assess their performance. The CODM
has been identified as the executive directors. Management has determined the operating segments based on the internal
reports. The group has identified eight reportable segments as follows:
IFA Hotels
IFA SA
IFA Zimbali
IFA Boschendal
IFA Estates
IFA Legends
IFA Namibia
Zimbali Rentals
The executive directors evaluate the segment performance based on operating profit or loss before tax and exceptional
items.
The following is an analysis of IFA SA Group's revenue and operating results by reportable segment:
IFA Hotels IFA SA IFA Zimbali IFA Boschendal IFA Estates IFA Legends IFA Namibia Zimbali Rentals Eliminations Consolidated
Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited
12 months 18 months 12 months 18 months 12 months 18 months 12 months 18 months 12 months 18 months 12 months 18 months 12 months 18 months 12 months 18 months 12 months 18 months 12 months 18 months
ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Revenue from
external customers 10 061 27 873 2 021 - 39 213 54 772 - - 2 205 10 204 - - - 6 681 724 1 483 - (6 681) 54 224 94 332
Intersegment revenue - - 4 522 9 854 - - - - 1 793 - - - - - - (6 315) (5 982) - 3 872
EBITDA (2 298) 5 531 (3 779) (5 002) (1 186) (3 079) (325) (1 763) (2 190) (2 511) (691) (1 006) (15) 14 952 (272) (152) - (14 401) (10 756) (7 431)
EBIT (2 738) 4 852 (16 805) (202 518) (3 705) (7 635) (7 670) (101 829) (2 201) (2 585) (7 888) (27 767) (15) 14 419 (272) (190) 12 751 182 282 (28 543) (140 970)
Net profit/(loss) (2 585) (1 442) (29 940) (205 610) (5 474) (3 062) (4 872) (106 227) (7 344) (5 848) (8 305) (26 381) (15) 15 685 (168) (95) 12 751 196 701 (45 952) (136 278)
Segment assets 188 180 196 840 432 692 537 630 128 950 125 341 149 76 788 479 33 477 245 557 248 067 - - 3 691 3 403 (421 177) (529 906) 578 522 691 641
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Revaluation Accumulated
capital premium reserve profit/(loss) Total
Audited R'000 R'000 R'000 R'000 R'000
Balance at 1 July 2010 2 182 69 710 45 595 (38 384) 79 103
Total comprehensive income for the period 283 (136 279) (135 996)
Balance at 31 December 2011 2 182 69 710 45 878 (174 663) (56 893)
Balance at 1 January 2012 2 182 69 710 45 878 (174 663) (56 893)
Total comprehensive income for the period (1 575) (45 953) (47 528)
Balance at 31 December 2012 2 182 69 710 44 303 (220 616) (104 421)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
12 months ended 18 months ended
31 December 31 December
2012 2011
R'000 R'000
Cash flows from operating activities 4 741 (42 096)
Cash used in operations 14 064 (18 837)
Interest income 8 421 10 090
Finance cost (17 720) (33 290)
Tax (paid)/received (24) (59)
Cash flows from investing activities 73 376 53 951
Expenditure to maintain operating capacity
Purchase of property, plant and equipment (493) (7 439)
Sale of property, plant and equipment 6 67 439
Expenditure for expansion
Disposal of interest in joint venture 32 099
(Advance to)/repayment from loans to fellow subsidiaries 946 17 073
(Advance to)/repayment from loans to associate (14 660) (37 126)
(Advance to)/repayment from financial assets 7 577 (8 471)
Purchase of additional shares in associate 80 000 (9 624)
Cash flows from financing activities (69 168) (9 240)
(Decrease) of borrowings (79 301) (24 252)
(Decrease) of loan from joint venture (30 112)
Increase of shareholders' loan 10 312 46 659
Finance lease payments (179) (1 535)
Total cash movement for the period 8 949 2 615
Cash at the beginning of the period 21 053 18 438
Total cash at end of the period 30 002 21 053
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated financial statements as set out in this report have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of IFRS and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and containing the information required by IAS 34: Interim Financial Reporting, the Companies
Act of South Africa and the JSE Limited's Listings Requirements ("JSE Listings Requirements").
The annual financial statements on which these condensed consolidated financial results for the twelve months ended
31 December 2012 ("the period") have been based, have been audited by the group's auditors, BDO South Africa Incorporated,
and have been prepared on the historical cost basis, except for the measurement of revaluations of land and buildings.
The unmodified audit report is available for inspection at IFA Hotels & Resorts Limited's registered office.
The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis
presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities,
contingent obligations and commitments will occur in the ordinary course of business.
The ability of the company to continue as a going concern is dependent on a number of factors. The most significant of these
is that the directors continue to procure funding for the ongoing operations for the company and that the letter of support and
the subordination agreement from the parent company will remain in force for so long as it takes to restore the solvency of the
company.
The preparation of these interim results were done under the supervision of the company's Financial Director, CJ Schutte CA(SA).
The board acknowledges its responsibility for the preparation of the interim condensed consolidated financial statements in
accordance with IAS 34, the South African Companies Act and JSE Listings Requirements.
The accounting policies applied conform with IFRS and are consistent with those followed in the preparation of the annual
financial statements for the year ended 31 December 2012.
Audited Audited
12 months ended 18 months ended
31 December 2012 31 December 2011
NOTES TO THE FINANCIAL RESULTS R'000 R'000
1. Basic and diluted earnings and headline earnings per ordinary share
The earnings and weighted average number of ordinary shares used in the
calculation of basic and diluted earnings and headline earnings per ordinary
share are as follows:
Headline and diluted headline loss per share ("HEPS") (cents) (21,78) (64,61)
Reconciliation of total earnings to headline earnings attributable to equity
holders of the parent:
Earnings attributable to ordinary shareholders (47 527) (135 996)
Add impairment of share of associate 6 176
Add loss/(less profit) on disposal of JV or associate (15 513)
Add/(less) tax effect 4 344
Headline loss (47 527) (140 989)
Number of shares
in issue 218 210 680 218 210 680
for EPS and HEPS calculation 218 210 680 218 210 680
2. Capital expenditure commitments
Contracted 3 214
3 214
3. Operating lease commitments 719 1 038
4. Investments and loans
Investment in associate companies
Loans to associate companies 245 557 324 403
Other unlisted investments 2 000 2 400
247 557 326 803
Directors' valuation of unlisted investments
unlisted associate companies 245 557 324 403
other unlisted investments 2 000 2 400
247 557 326 803
5. Related party transactions
During the reporting period, companies in the group entered into various transactions. These transactions were entered
into in the ordinary course of business and under terms that are no less favourable than those arranged with independent
third parties. All related party transactions and outstanding balances are eliminated in preparation of the consolidated
financial statements of the group. All transactions with joint ventures and the associates are concluded on an arm's length
basis.
6. Post balance sheet events
The directors are not aware of any significant matter or circumstance arising since the end of the reporting period not
otherwise dealt with in this report or the financial results which materially affect the financial position of IFA SA Group or the
results of its operations to the date of this report.
POSTING OF ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
Shareholders are advised that the annual report will be posted on Saturday, 30 March 2013 along with the notice of annual general meeting.
Notice is hereby given that the annual general meeting of IFA Hotels & Resorts Limited, ("IFA" or "the company") will be held at Zimbali Northgate Suites,
Zimbali Coastal Resort, Zimbali, KwaZulu-Natal on Tuesday, 30 April 2013 at 11:00.
APPLICABLE DATES
Record date to receive the notice of Annual General Meeting: Friday, 22 March 2013
Last date to trade to be eligible to vote: Friday, 12 April 2013
Record date to be eligible to vote: Friday, 19 April 2013
Last date for lodging forms of proxy: Friday, 26 April 2013
RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the previous cautionary announcement, published on 18 February 2013, and are advised that the discussions referred to therein
are ongoing and that, if successful, these could have an impact on the company's share price.
In the circumstances, shareholders are advised to continue exercising caution when trading in their IFA shares until a further announcement is made.
Zimbali
28 March 2013
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Legal Advisor: Larson Falconer Hassan Parsee Incorporated
Corporate Advisor: DEA-RU (Pty) Ltd
Date: 28/03/2013 05:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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